ECB Expands Climate Factor Use in Collateral Framework for Non-Financial Corporate Credit Claims

The European Central Bank (ECB) has decided to extend the use of climate factors in its collateral framework to certain credit claims issued by non-financial corporations.

This decision aims to strengthen the Eurosystem's risk management framework and protect it against potential declines in collateral value due to climate-related transition shocks.

The ECB will consider a sector-level stressor, the debtor's exposure to transition-related uncertainties, and the residual maturity of the credit claim when determining the climate factor for each asset.

The maximum additional reduction in the final collateral value will be 5%, and the climate factors for individual credit claims will not be publicly disclosed.